Owners of work-at-home and other small business opportunities, distributorships, licensee opportunities and even small franchises will more often than not fall under one of two categories—small business or micro-business (usually five employees or less)…or both. And at times, knowing just where you stand and what those terms mean when it comes to everything from paying taxes to qualifying for government contracts can be confusing.
Well, now all the rules and regulations associated with the Affordable Care Act (aka Obamacare) are here to make things even more complicated.
Here's the rundown...
According to the U.S. Small Business Administration (SBA), “a small business concern is one that is “independently owned and operated, is organized for profit, and is not dominant in its field.” Factors that have a bearing on whether or not your work-at-home or other small business meets the criteria of a small business include everything from the industry you are in, size-standard eligibility requirements in accordance with your total number of employees and averaged sales volume over a three-year period, all of which you’ll need to calculate.
Clear as mud, right? Oh, it gets better.
Where SBA oftentimes uses a ceiling of 500 employees to define a “small business” and even offers government-insured loans to companies with as many as 1,500 workers in some industries where size is somewhat relative, Obamacare is here to change all that yet once again. Welcome to the “new” small where…
• Access to the upcoming online health insurance marketplaces (aka the state and SHOP exchanges) only is available to firms with 100 or fewer employees (or lower if set as such by the states the first two years)
• Businesses with 50 full-time employees (or the full-time equivalent) will be required to provide sufficient health insurance to their workers or incur a penalty
• Tax breaks to help small business owners pay for their employees’ coverage are fully available only if the employer has 10 employees or less and are partially available only if the employer has 25 employees or less.
The result, other than small business owners' escalating confusion about all of this of course?
Unfortunately, there are a number of so-called “small” business owners with anywhere in the range of 30 to 40 employees who, although they would qualify as such by pretty much any other SBA standard, don’t when it comes to Obamacare. In fact, they find themselves in a crazy kind of limbo where they’re just small enough to be exempt from the provisions set forth by the employee mandate, but too large for a tax break.
Unfortunately, love it or hate—and, as we've discussed here in these pages before—there’s no question that the Affordable Care Act’s implementation is going to get messy before it gets better and the bugs get worked out. This whole size thing and its associated inconsistencies are just one more example of that.
While it almost goes without saying, we'll say it anyway... Hold on tight. It’s going to be a bumpy ride.